Taiwan’s Ministry of Economic Affairs (MOEA) has formalised the designation of business activities surrounding cryptocurrencies. Moreover, it named a supervisory authority to oversee these operations. The development comes after years of regulatory ambiguity in the virtual currency market.
In a recent cabinet meeting, the MOEA reportedly concluded that cryptocurrency businesses will be listed under the category of “finance, insurance and real estate” as “virtual currency platforms and trading businesses” rather than under the category of “software design services.” Security Token Offerings (STO), a type of public offering for digital tokens using blockchain or distributed ledger technology, will be listed under the subcategory of securities firms. As such, it will be subject to the same supervision as existing businesses in the securities industry.
Additionally, the body made the Financial Supervisory Commission (FSC) the main authority responsible to oversee cryptocurrency operations. Thus, the commission needs to work with tax and law departments to set up rules to regulate the evolving but volatile cryptocurrency market.
Cryptocurrency operations have grown sporadically over the years even without the government’s direct backing. Led by the rise of Bitcoin, cryptocurrency businesses and blockchain companies have sprung up over the past few years in Taiwan, once the home to the dissolved crypto exchange Cobinhood. The first Bitcoin futures Exchange-Traded Fund (ETF) began trading in the U.S. with dramatic results. Its market capitalisation recently exceeded US$3 trillion (NT$83 trillion). While these developments certainly look promising, Taiwan’s legislative body is demanding proactive moves to close crypto loopholes and protect local investors and consumers.
The cryptocurrency world can appear daunting to outsiders with all its jargon and technical terms. Adding to the confusion, there are unscrupulous individuals who find ingenious ways to trick people into cryptocurrency scams and schemes. But the virtual currency is expected to grow even bigger.
At its essence, a cryptocurrency is a digital asset that uses cryptography for security. Unlike traditional currency, these are not issued by a central authority and are not considered legal tender — not in the traditional sense. Many governments around the world fear cryptocurrency as it’s an independent entity that, unlike physical money, is not issued by a central bank. It moves freely in the digital world without the government’s or any bank’s control. In short, it’s decentralised, reason enough why they’re often referred to as a global currency.
However, cryptocurrencies can also act as a big boost to the local economy. Studies reveal that countries that welcome crypto networks reap economic benefits through innovation, investment, jobs and taxes. Plus, poorly banked countries can make the most of the digital coin to facilitate commerce.
By designating and supervising cryptocurrency operations, Taiwan could be a step closer to reaping the benefits of digital transformation. It can make its dream of digital adoption for all its citizens as stipulated in its Digital Nation & Innovative Economy Development Program (DIGI+) 2017-2025 program.
The success of these initial steps towards crypto should be apparent in the years to come. One thing’s certain: Taiwan is committed to driving its digital economy forward. To date, it has constantly been finding ways to position itself as a global leader in Information and Communications Technology (ICT). Its recent establishment of the AI HUB meant to make it an Artificial Intelligence powerhouse in the region attests to that — as reported on OpenGov Asia.
